Course information 2022-23

EC3016 International Economics

General information
COURSE LEVEL: 6
CREDIT: 30
NOTIONAL STUDY TIME: 300 hours

Summary
This course is an analytical course in international trade and international finance. Students
are introduced to the theories with which to understand international trade patterns,
examine trade policies, analyse the determinants of exchange rates and financial crises and
address topical issues of international economic interdependence between states.
Conditions
Prerequisite: If taken as part of a BSc degree, the following course(s) must be attempted before
you can register on this course.
• EC2065 Macroeconomics AND either
• MN2028 Managerial economics OR EC2066 Microeconomics

Aims and objectives

• To acquire the analytical methods needed and understanding of how and when to apply
different models and approaches to events in the world economy.
• To provide an understanding of the intellectual and practical problems that arise from the
economic interaction between countries.
• To offer explanations of the international pattern of trade and specialisation and of the reasons
why similar economies often trade more with each other than with dissimilar ones.
• To provide an account of the sources of the gains from trade.
• To offer explanations, in the monetary sphere, of the determinants of exchange rates; of the
timing and causes of financial crises and an analysis of the channels of international economic
interdependence.

Learning outcomes
At the end of the course and having completed the essential reading and activities students should
be able to:

• discuss and explain specific policy issues such as ‘environmentalism as protectionism’;

international dumping; the choice of exchange rate regime; the desirability of free capital flows

Please consult the current EMFSS Programme Regulations for further information on the availability of a course,
where it can be placed on your programme’s structure, and other important details.

EC3016 International economics Page 1 of 2

• apply a specific framework to illustrate the connection between a variety of models and
approaches. Explain the connections between Ricardian, Heckscher-Ohlin and the specific
factors models in trade theory, or between the ‘monetary approach’ and the ‘asset approach’ in
exchange rate theory.
• explain how international economic theory has been shaped by real world events.

Essential reading
For full details, please refer to the reading list.
Krugman, P., M. Obstfeld and M. Melitz International Economics: Theory and Policy. (Boston, Mass.;
London: Pearson/Addison-Wesley, 2014) Pearson global edition; tenth edition [ISBN
9781292019550].
In the second part of the syllabus, on international finance, there are a couple of instances where
the above book is supplemented with required readings from one other textbook:
Copeland, L. Exchange Rates and International Finance. (Harlow: Prentice Hall, 2014) sixth edition
[ISBN 978-0273786047].

Assessment
This course is assessed by a three-hour unseen written examination.

Syllabus
The module international economics is divided into two parts: international trade and international
finance (sometimes referred to as international macroeconomics or international monetary
economics). This split essentially coincides with the distinction between the microeconomics and the
macroeconomics of the open economy.

International trade covers the reasons for trade and explanation of trade patterns and the gains
accruing from trade or from restricting trade. These are core areas and call for extensive coverage.
Linked to this core are a number of specific issues which must also be studied: increasing returns and
trade; international factor movements; growth and trade; income distribution and trade; economic
integration; multinational enterprises; and ‘North-south’ issues. Empirical evidence supplements the
theoretical treatment. The European Union (EU), World Trade Organization (WTO) and the United
Nations Conference on Trade and Development (UNCTAD) are institutionally involved in trade policy
issues and their major concerns are included in the subjects to be studied.
International finance covers the balance of payments, exchange rates and open-economy
macroeconomics. Linked to this core are a number of specific issues which must also be studied:
national income accounting; spot and forward markets; parity conditions; exchange rate
determination; exchange rate regimes; exchange rate stability and currency crises; and currency
unions. Empirical evidence, though often inadequate and conflicting, is relevant in many areas.
Issues associated with the European Monetary System (EMS), the International Monetary Fund (IMF)
and, in general, with international monetary relations are also included in the syllabus.

Please consult the current EMFSS Programme Regulations for further information on the availability of a course,
where it can be placed on your programme’s structure, and other important details.

EC3016 International economics Page 2 of 2